Defense cuts could slow D.C. economy for years

 

Defense Spending is Federal spending.

After surging in size and profits during the post-9/11 era, the defense industry in metropolitan Washington is bracing for a major contraction and significant layoffs that economists said could produce a drag on the regional economy for years.

Already, there have been signs that announced cuts in national defense programs are having an impact: Six hundred executives at Bethesda-based Lockheed Martin are accepting the company's offer of a buyout. ITT Defense and Information Systems, based in McLean, this year combined seven business units into three and cut 1,000 workers. Hundreds were let go this year from Northrop Grumman operations in Maryland.

General Dynamics, which has its headquarters in Falls Church and bases much of its information technology business in Fairfax, had just over 1,100 local employees at the end of 2000; there were nearly 6,000 by 2005. Between 2002 and last year, its revenue grew from $13.7 billion to $32 billion.

Much of the company's local work is related to information technology - areas such as collecting and processing intelligence data and managing cybersecurity. The firm also has a program office for a Marine Corps vehicle in Woodbridge and an office near the Navy Yard.

Likewise, Arlington-based contractor CACI International, which works in the defense and intelligence worlds, grew dramatically as the United States ramped up its presence in Iraq and Afghanistan. The company has a broad range of service-related businesses, including evaluating the military's security systems and helping it bring together multiple systems such as sensors and intelligence programs.

At the start of 2001, CACI had about 2,600 area employees; it now has close to 6,200.

Its revenue also grew virtually every year, from $490 million in 2000 to $2.7 billion in 2009. Profits ballooned from $38.4 million in 2000 to $107 million last year.